South African wine exports soar

8 September 2008

South African wine exports are soaring in defiance of the international economic slowdown, says Wines of South Africa CEO Su Birch, with over 363-million litres sold offshore in the 12 months to July 2008, an increase of 27% on the previous 12 months.

“This is way ahead of the originally anticipated target of 300-million litres a year we were hoping to achieve by 2010,” Birch said in statement a few weeks ahead of Nedbank Cape Wine 2008, South Africa’s biggest wine exhibition, taking place in Cape Town from 23 to 25 September.

“The momentum appears to be continuing, despite even tougher trading conditions since the start of this year,” Birch said. “Export volumes are up 31% for the first seven months of 2008, thanks not only to a weaker rand and the continued strength of big brands in markets such as the UK, Sweden and Canada, but also the emergence of buyers in developing markets such as Angola and south-east Asia.”

Birch said exports had also been fuelled by rising rose sales, up 60% on the previous year, as local producers successfully catered to the thirst for pink wines on international markets.

Wider geographical reach

It was significant, Birch added, that sales had occurred across a far wider geographic reach.

“Whereas in 2003, the UK and the Netherlands accounted for 72% of all South Africa’s packaged wine exports, today the UK and the Netherlands, together with Sweden, Germany, Denmark and the US, make up 72% of these sales. At the same time, there is growing interest in our wines from countries in Africa and the East.”

The UK was still South Africa’s largest wine export destination, however, with growth resuming in that market. “Our exports of packaged wines are up 35% in the UK, and we have recovered market share lost in 2006,” Birch said. “That most of the key UK retailers are coming to Nedbank Cape Wine 2008 is also a very affirming sign.”

The shift in the composition of South Africa’s biggest customers had seen Germany overtaking the Netherlands to become South Africa’s second-largest wine market.

“South Africa is also the biggest New World supplier to Germany, measured in value,” Birch said. “Although the Netherlands has moved down to third-biggest export destination, local wines have assumed the biggest value and volume share of the New World category in that country.

“The fourth biggest destination is Africa, where resource-rich economies are flourishing and traders recognise the cost-efficiencies of sourcing within the sub-Saharan region, as opposed to in Europe, its traditional source of wines.”

South Africa was also the biggest volume player in Sweden, and the fastest-growing New World producer in most Canadian markets.

Concern over bulk exports

Sounding a note of caution, Birch said there was some concern about the high growth in bulk wine exports, that had risen over 50% for the 12 months to July, with many importers electing to bottle in Europe.

“Our bottling costs are not always globally competitive, and this is being exacerbated by escalating input costs faced by producers. Wineries are now facing increases of up to 17.5% in the cost of dry goods, which encourages them to sell in bulk where viable.

“This is not a good way to build brands, or to protect the employment of the countless families who depend on the packaging industry for their income.”

She also stressed that while exports were expected to continue rising, it would not be possible to maintain such high levels of growth. “We were able to take advantage of the shortfall in Australian and certain European markets as a result of their poor harvest, but their current supply is returning to more normal levels.”

SAinfo reporter

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